Compass Diversified Holdings (NYSE:CODI)
is an unusual investment option in many respects. You can think of it
as a holding company or private equity fund trading as a public entity,
but what Compass is really about is buying controlling stakes in small
to mid-sized businesses with certain quality characteristics and then
reaping the cash flow that those businesses produce. While the company
does sell businesses from time to time, it's not an active churner of
its portfolio and in some ways is maybe a little more like Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) (without the core insurance operations) than a typical private equity fund.
It has been about ten months since I've written about Compass,
and the shares are down about 10% over that time (an amount almost
covered by the distribution) as the company has seen some underwhelming
performance in its portfolio and has put itself in a position where it
is not presently covering its distribution. Management has a lot of
buying power on hand, though, and I think long-term coverage of the
distribution is not an issue. Investors should carefully consider the
tax ramifications of owning this (it is a partnership and it distributes
a K-1), but I think the shares are undervalued today and hold some
appeal for their cash/income-generating qualities.
Please continue here:
This Compass Still Points To Sizable Distributions
No comments:
Post a Comment